The Pension Benefit Guaranty Corporation is delaying theprojected insolvency date for its multiemployer insurance programby three years, thanks to radical new funding provisions passed inthe Multiemployer Pension Reform Act of 2014.

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The multiemployer program, which insures the pensions of morethan 10 million participants in collectively bargained plans, isnow expected to be insolvent in 2025, as opposed to 2022, accordingto findings released in PBGC’s latest projection report.

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The program’s fiscal year 2014 deficit of $42.5 billion is nowprojected to be $28 billion by 2024.

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Increased premiums payments authorized under the MultiemployerPension Reform Act explain much of the reduction in the projecteddeficit, according to a PBGC release.

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The Multiemployer Pension Reform Act, passed in thewaning moments of the last Congressional session,doubled PBGC premiums from what they otherwise would have beenbeginning in 2015 and going forward, according to the report.

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New MPRA premium requirements accounted for most the $1.4billion dollar deficit reduction projected for fiscal year2015.

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The MPRA also allows plans expected to be insolvent in the next20 years to reduce promised benefits to retirees, so long as doingso will assure the plans remain solvent and that those planspreserve benefits at least 10 percent higher than the benefitsguaranteed by PBGC.

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The option to cut benefits, which would have to first beauthorized by the Department of Treasury and then bevoted on by affected union members, presents sponsors andparticipants with a “difficult choice,” according to the projectionreport: cut benefits on their own, or take no action and riskdeeper cuts upon plan insolvency.

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Participants in future insolvencies covered by PBGC willexperience “significant benefit reductions,” said the report.

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If the worst-funded plans do not take action by suspendingbenefits, or make use of new provisions that allow PBGC topartition some benefits in the worst-funded plans, then themultiemployer program deficit is expected to be $44.3 billion by2025.

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But even when accounting for new premiums, and assuming theworst-funded plans make use of the new benefit suspension andpartition tools afforded in MPRA, the program still stands agreater-than-50-percent chance of insolvency by 2025.

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The risk of insolvency rises rapidly in the ensuing years,according to the report.

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The outlook for PBGC’s single-employer program remains likely toimprove over the next decade, according to the projectionsreport.

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Read: Pension health varies

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Under new estimates, the single-employer program’s fiscal year2014 deficit of $19.3 billion is expected to shrink to $4.9 billionby 2024, an almost $3 billion improvement over the 2023 deficitprojection PBGC made last year.

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Nick Thornton

Nick Thornton is a financial writer covering retirement and health care issues for BenefitsPRO and ALM Media. He greatly enjoys learning from the vast minds in the legal, academic, advisory and money management communities when covering the retirement space. He's also written on international marketing trends, financial institution risk management, defense and energy issues, the restaurant industry in New York City, surfing, cigars, rum, travel, and fishing. When not writing, he's pushing into some land or water.